1. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO OWNER’S LIABILITY THIRD LECTURE OIL POLLUTION LIABILITY

2. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO Chapter 10 ’Oil Pollution and Environmental Liability’ Overview: 1.Background 2.Norwegian rules: a) convention based liability, b) non-convention based liability, c) chapter 9 liability, and d) liability in terms of the Petrolium Act 3. International developments: a) HNS Convention 1996, and b) Bunkers Convention 2001

3. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 1. Background 1.Large threat posed by shipping industry 2.Two types: a) oil spills, and b) operational discharge 3. Three-fold intervention: a) prevention, b) response, and c) liability (including compensation)

4. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 1. Background (cont.) International oil pollution liability regime: a) inadequacy of the global limitation regime b) international response: i.1969 Civil Liability for Oil Pollution Convention (CLC): 1976 CLC Protocol, (1984 CLC Protocol), and 1992 CLC Protocol (with 2000 amendment) ii. 1971 Fund Convention: 1976 Fund Protocol, (1984 Fund Protocol), 1992 Fund Protocol (with 2000 amendment), and 2003 Supplementary Fund Protocol iii.Voluntary agreements STOPIA (Small Tanker Oil Pollution Agreement) TOPIA (Tanker Oil Pollution Agreement)

5. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 1. Background (cont.) Tier system: First tier: CLC Liability and STOPIA Second tier: 1992 Fund Third tier: 2003 Supplementary Fund Max 90m SDR MC section 194 Max 203m SDR Size: 13 - 198,5m SDR MC section 201 Max 750m SDR Size: 547 SDR MC section 201

6. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 1. Background (cont.) Norwegian legal sources. 1.Pollution Act (main legal source) - section 53: special legislation takes presedence 2. Maritime Code (special legislation) 3. Petroleum Act (special legislation)

7. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules: a) convention-based liability 1.Applies the 1992 CLC Protocol, the 1992 Fund Protocol and the 2003 Supplementary Fund Protocol. 2.Application (sections 191 and 206) a)Territorial application: section 206 (1992 CLC art II) b)Ships covered: section 191 (1992 CLC art I.1) ‘Ship means in sections 191 - 209 any sea-going vessel and seaborne craft of any type whatsoever constructed or adapted for the carriage of oil in bulk as cargo (...) Provided that a ship capable of carrying oil and other cargoes shall be regarded as a ship only when it is actually carrying oil in bulk as cargo and during any voyage following such carriage unless it is proved that it has no residues of such carriage of oil in bulk aboard.’ c)Pollutants covered: section 191 (1992 CLC art I.5) ‘Oil means in sections 191 - 209 any persistent hydrocarbon mineral oil such as crude oil, fuel oil, heavy diesel oil and lubricating oil, whether carried on board a ship as cargo or in the bunkers of such a ship.’

8. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) d) Pollution damage: section 191 (1992 CLC art I.6) ‘With pollution damage is meant: (a)loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship...’ e) Warships excluded: section 206 (1992 CLC art XI.1) ‘The rules in sections 191 - 205 shall not apply to warships or other ships owned or operated by a State and used, for the time being, only on government non-commercial service.’

9. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) Principal features: 1.Channeling of liability: a) Registered owners: section 191 (1992 CLC art I.3) ‘With owner is meant the person or persons registered as the owner of the ship. However in the case of a ship owned by a State and operated by a company which in that State is registered as the ship's operator, "owner" shall mean such company.’ b) Owners only: section 193 (1992 CLC art IV.4) ‘Claims for compensation for oil pollution damage can only be made against the owner of a ship according to the provisions of this Chapter.’

10. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) c) Cannot pursue the following: section 193 (1992 CVC art IV.4) ‘No claim for compensation for pollution damage under this Convention or otherwise may be made against: (a)the servants or agents of the owner or the members of the crew, (b)the pilot or any other person who performs services for the ship, (c)the ship operator (reder) or manager or operator of the ship, the charterer, the consignor, shipper, owner of cargo or consignee, (d)any person performing salvage operations with the consent of the owner or on the instructions of the public authority; (e)any person taking preventive measures; (f)all servants or agents of persons mentioned in subparagraphs (c), (d) and (e). unless the damage resulted from their personal act or omission, committed with the intent to cause such damage or through gross negligence and with knowledge that such damage would probably result.’

11. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) d) Registered owner’s limited right of recourse: section 193 (1992 CLC art III.5) ‘A recourse action cannot be brought against anyone listed in a, b, d, e, or f, unless the damage resulted from their personal act or omission, committed with the intent to cause such damage or through gross negligence and with knowledge that such damage would probably result. For other recourse actions the ordinary rules will apply.’ 2. Basis of liability: a) Strict liability: section 191 (1992 CLC art II.1) ‘Regardless of fault, the owner of a ship is liable for oil pollution damage.’

12. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) b) Liability not absolute (ie exceptions): section 192 (1992 CLC art II.2 and.3) ‘No liability for pollution damage shall attach to the owner if he proves that the damage: (a)resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or (b)was wholly caused by an act or omission done with intent to cause damage by a third party, or (c)was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function. If the owner proves that the injured party deliberately or negligently contributed to the damage, the liability can be abated according to the general rules governing damages.’

13. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) 3. Limitation of liability: a) Limitation: section 194 (1992 CLC art V (2000 amendment)) ‘The owner’s liability in terms of section 191 is limited to 4.150.000 SDR for ships with a tonnage not more than 5.000 tons. For ships with a tonnage of more than 5.000 tons the limits of liability is increased with 631 SDRs per ton above 5.000 tons. The limits of liability shall not exceed 89.770.000 SDR.’ b) Incidence ‘The right to limit relates to all pollution liability as a result of the same occurrence, or series of occurrences having the same origin, which causes pollution damage.’

14. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) c) Breaking the limit: section 194 (1992 CLC art III.2) ‘The owner shall not be entitled to limit his liability if it is proved that the pollution damage resulted from his personal act or omission, committed with the intent to cause such damage, or gross negligence and with knowledge that such damage would probably result.’ d) Costs excluded: section 194 liability of interest and legal costs. e) Fund must be constituted: section 195 (1992 CLC art V.3) 4. The supplementary funds: section 201, 1992 Fund Cvn and 2003 Supplementary Fund Cvn a) The Fund Conventions applies as law. b) Restrictions on recourse actions.

15. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules a) convention-based liability (cont.) 5. Compulsory insurance: section 192 (1992 CLC art VII.7) a) Norwegian vessels, foreign vessels in Norwegian ports or the Norwegian side of the continental shelf. b) More than 2.000 tons. c) Cover amount in section 194. 6. Prescription: section 503 (1992 CLC art VIII) a) Claims for compensation: 3 years within time of loss, damage or expense b) No more than six years after the incidence.

16. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules b) Non-convention-based liability Section 207: 1. Applies to: a) damage on continental shelf or high seas (if jurisdiction) and, if warship, in all maritime zones, (section 207, first para) and b) claims before a Norwegian court relating to damage in non- convention state (section 207, third para) 2. Two approaches: a) As to a) above: section 191 strict liability and section 192 exceptions apply b) As to b) above: the above is not applicable, a separate fund is created (compare section 209, third para) 3. Different level of Norwegian interest

17. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules c) Chapter 9 liability Section 208: 1. Applies to a) crafts not transporting oil as bulk cargo b) non-persistent oils 2. Territorial application: the Norwegian part of the continental shelf 3. Section 191 and 192 applies (ie strict liability and the exceptions) 4. Chapter 9 limitation applies (not a section 173 no 2 exception) 5. Chapter 10 does not apply

18. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 2. Norwegian Rules d) Liability in terms of the Petroleum Act Section 209 1. The Petroleum Act of 29 November 1996 no 72 takes presedence, unless 1992 CLC duty 2. Overlap minimal

19. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 3. International developments a) The HNS Convention 1996 1.Not yet in force 2.Applies to a wide range of polluting substances 3.Two-tier liability: First tier: Shipowner is liable for a) vessels of no more than 2.000 tons:SDR 10 million b) additional per ton from 2.001 to 50.000 tons:SDR 1.500 per ton c) additional per ton of more than 50.000 tons:SDR 360 per ton to a maximum of SDR 100 million. Second tier: Maximum of SDR 250 million.

20. © DET JURIDISKE FAKULTET UNIVERSITETET I OSLO 3. International developments b) The Bunker Convention 2001 1.Not yet in force 2.Covers pollution damage from oil in bunkers 3.Modeled on CLC in terms of a)definition of ‘pollution damage’, b)territorial application, and c)compulsory insurance (over 1.000 tons) 4.Direct action and financial security provision